In today’s briefing:
- Midea Group (000333 CH): H-Share Listing & Index Implications
- HSCI Index Rebalance Preview: Low Probability Add in December
- S&P/ASX Index Rebalance Preview: Changes from Now to December
- Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know
- Prosus/Naspers: Business As Usual As CEO Steps Down
- Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results
- Integral Corporation IPO Trading – Low Demand but Somewhat Cornered
- Seibu Giken IPO – Quick Note – Not Particularly Enticing
- Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb
Midea Group (000333 CH): H-Share Listing & Index Implications
- Midea Group Co Ltd A (000333 CH) could raise between HK$35-54bn (US$4.5-6.9bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
- The H-shares could get Fast Entry to some global indices depending on the number of shares that are allotted to cornerstone and/or strategic investors.
- The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.
HSCI Index Rebalance Preview: Low Probability Add in December
- There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
- Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
- Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.
S&P/ASX Index Rebalance Preview: Changes from Now to December
- Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
- Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
- The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.
Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know
- The proposal to increase NPS’s annual target investment return rate by 1%p by 2028. A rough mathematical estimate suggests the necessity of an additional investment of nearly ₩60T until 2028.
- It augments the overall investment volume in local stocks to ₩200T. This projection implies an annual net purchase of approximately ₩12T from the forthcoming year through 2028.
- Consequently, this matter is currently among the most captivating topics in the Korean local market, and efforts are underway to identify the sectors and stocks that stand to benefit.
Prosus/Naspers: Business As Usual As CEO Steps Down
- Bob van Dijk, CEO of both Naspers (NPN SJ) and Prosus NV (PRX NA), has stepped down, effective 18 September.
- Van Dijk was instrumental in the 2019 listing of Prosus and the creation (and subsequent unwinding) of the highly-criticised Prosus/Naspers cross-holding structure.
- His departure should have minimal impact. Everything else basically stays the same. Continue to be long Prosus vs. NAV – that is, Prosus vs. Tencent (700 HK).
Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
- Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
- We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.
Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results
- Doosan Robotics (454910 KS) reported excellent IPO book building results. The IPO price has been finalized at 26,000 won (upper end of the IPO price range).
- A total of 1,920 institutional investors participated in the IPO demand forecast survey and the demand ratio was 272 to 1.
- The trading strategy on the first day of IPO is to take some profits (25%-50% of total) if the share price shoots much higher than the IPO price by 70-100%+.
Integral Corporation IPO Trading – Low Demand but Somewhat Cornered
- Integral Corporation (5842 JP) raised around US$123m in its Japan IPO.
- Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
- In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.
Seibu Giken IPO – Quick Note – Not Particularly Enticing
- Seibu Giken (6223 JP) (SG) is looking to raise around US$93m in its Japan IPO via selling a mix of primary and secondary shares.
- SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
- In our previous note, we looked at the company’s past performance. In this note, we talk about valuations.
Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb
- Tata Motors DVR (TTMT/A IN) now trades at a 32.9% discount to Tata Motors Ltd (TTMT IN) and there is another 4.4% in the trade following the scheme of arrangement.
- Tata Motors DVR (TTMT/A IN) could be added to global indices in November and that will bring significant inflows to the stock.
- The pre-positioning and passive buying could lead to the DVR discount narrowing further and provide trading opportunities for the next few weeks.
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